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Charges dropped, house still seized as proceed of crime

Civil forfeiture allows the province to seize property associated with crime, even when no criminal charges have been filed.

This house in south Oshawa was raided by police in 2006. Even though all charges were dropped, the provincial government still seized 60 per cent of the value of the house through a civil forfeiture law. (Marco Chown Oved / Toronto Star)

When police stormed a house on a quiet Oshawa street in August 2006, they thought they had hit the jackpot: Ounces of cocaine, Oxycotin pills, ecstasy, hashish and cash.

They boasted of the bust in press releases, but almost three years later, the charges against the residents of the house were quietly dropped. Yet Denis and Margaret Deneault weren’t off the hook.

Even though they were never found guilty of a crime related to the raid, the government went after their house using a rare legal procedure called civil forfeiture and seized 60 per cent of its value last month. Judge David Salmers ordered the Deneaults to pay $55,792 in order to keep their home.

The Deneaults did not want to be interviewed for this story, explaining on their doorstep that the process had dragged on for years and they were happy to cut a cheque and have it done with.

“You can fight it, but the lawyers will cost you more than they’re asking for,” said Denis.

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Margaret said the process was unfair: the charges had been dropped and they were still being punished for the crime. “It’s a total double-standard law,” she said.

Civil forfeiture targets property that is “a proceed or an instrument of unlawful activity,” wrote Ontario attorney-general spokesperson Brendan Crawley in an email. Yet no conviction — not even a charge — is necessary for a seizure.

“Proceeds means property, such as money, that is acquired as a result of unlawful activity. An instrument is property that is likely to be used to engage in unlawful activity, such as a house used as a marijuana grow operation. Property includes all types of assets, such as real estate, cars and cash,” Crawley wrote.

Legal experts say that the procedure is easily abused because the standard of proof in civil court is much lower than it is in a criminal proceeding.

If the Crown’s case isn’t strong enough for a criminal conviction — where it must be proved “beyond a reasonable doubt” — it still may be good enough to seize property, because in civil court you only need to demonstrate your case on “a balance of probabilities.” If a judge is 51 per cent convinced that a house was bought with dirty money or was used while committing a crime, then it can be snatched by the state.

“It goes against the core of my criminal-lawyer being that the state can do this,” said Craig Bottomley, a lawyer with experience fighting civil forfeitures. “If you’re going be doing something as serious as taking away someone’s home, then they should have the benefit of a trial where the state is put to the standard of proof beyond a reasonable doubt.”

The idea behind civil forfeiture was to give the government a way to go after drug dealers’ profits. It’s a popular Robin Hood policy that seizes goods owned by criminals, liquidates them and puts the money in a fund for victims of crime.

“But if you overstretch from that more pure motive and you say, ‘we’re taking money away from people that we find unsavory, and we’re going to give it away and we’re going to look good politically doing it,’ then it becomes more problematic,” said Bottomley.

In the United States, recent reports have exposed small town police departments that employ roadside civil forfeitures to seize cars, cash and even electronics, using the resale proceeds from these items to finance their own operations.

The U.S. Department of Justice seized almost $4.2 billion worth of property in 2012 alone, according to the report, but here in Canada, the statute is used far less often.

According to Ontario’s attorney-general, since November 2003 the province has seized $44.6 million in property and frozen $15.6 million in assets pending civil proceedings. Most of this has been ostensibly crack houses, marijuana grow operations, biker clubhouses and street racing cars.

The attorney-general has distributed $21.2 million to victims of crime, but the vast majority of this was sent to the US in relation to the Stanford Ponzi Scheme.

Because seized property doesn’t go to the police, there isn’t the same profit motive in Canada as in the United States, but Bottomley says this hasn’t prevented the crown from pursuing some questionable cases.

“You get some very creative applications by the government to do these things, and you wonder, ‘what’s the intention here?’ when the province is collecting all this money,” he said.

In Orillia, the crown is attempting to secure the forfeiture of two rooming houses, arguing that tenants were selling drugs and their rent payments are proceeds of crime. The landlords have not been charged with any crime but are being held liable for the alleged crimes of their tenants.

In a factum filed in Barrie, landlord Margaret Reilly says she and her husband managed six income properties and reserved two of them for “disadvantaged members of society.”

The Reillys charged $450 for rooms and rented to homeless people and people with mental health and substance abuse issues.

“That some drug use occurred at these properties is beyond dispute,” the factum says; the landlords attempted to help their tenants back onto their feet, hiring them for maintenance work and even driving them to addictions counsellors.

“The Reillys’ tenants were unsavory, mentally ill and drug addicted; but they needed somewhere to live,” it says. “To accept the Applicant’s submission that the properties should be forfeit as the proceeds of unlawful activity would set an untenable and unfair standard for landlords of all types.

“A family renting out their basement to a fraud artist could lose its home. A corporation with a skyscraper apartment building could lose the entire building if tenants paid a month’s rent with money obtained selling marijuana.”

Attorney-general spokesperson Crawley pointed out that civil forfeiture legislation protects “legitimate owners (those who owned the property prior to the unlawful activity and were deprived of it; or who acquired the property after the unlawful activity but did not know) …(and) responsible owners (those who have done all that can reasonably be done to prevent their property from being used for unlawful activity).”

“Finally, under the legislation, the court retains a residual discretion to exempt property from forfeiture if to do so would be “clearly not in the interests of justice,” Crawley wrote.

Bottomley, who represents Reilly, declined to comment specifically on the case because it is still before the courts. But he did point out that Canada, unlike the United States, has no constitutional protection for property.

The U.S. Constitution’s Fifth Amendment says that no one should “be deprived of life, liberty, or property, without due process of law.” By contrast, the Section 7 of The Canadian Charter of Rights and Freedoms only guarantees “the right to life, liberty and security of the person.”

“It’s a difficult constitutional climb,” he said. “There are very few safeguards.”

Bottomley doesn’t believe that any politician will change the laws on civil forfeiture and hopes instead that judges will use sound reason “to create a body of case law where spurious applications are going to be stamped out.”

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